What Law Applies and Different Types of Contracts Flashcards
What Law Applies
The UCC governs all transactions for the sale of goods.
The Common Law Governs all other contracts.
What are Goods
Goods means all things which are moveable at the time of identification to the contract
Predominant Purpose Test
When there is a contract which involves both the sale of goods and the provision of services, the UCC will govern the transaction if the predominant purpose of the contract was for the sale of goods with an incidental motive of supplying services.
To determine the predominant purpose, the court will consider:
1) the language of the contract
2) The nature of the supplier/seller’s business
3) The allocation of value
NOTE – If the contract divides payment between goods and services, then Article 2 will apply to the sale portion and the common law will apply to the service portion.
Bilateral Contract
A bilateral contract is one consisting of the exchange of mutual promises. A bilateral contract may be accepted in any reasonable way.
Unilateral Contract
A unilateral contract is one in which the offeror expressly clarifies that acceptance can be made only by performance.
Acceptance of a unilateral contract occurs upon completion of the performance.
However, when an offeree starts performance, the contract becomes irrevocable for a reasonable time to allow the offeree to complete performance.
Two True Unilateral Contracts
1) the offeror clearly indicates that performance is the only method of acceptance
2) An offer to the public, such as a reward, which clearly contemplates acceptance by performance rather than a promise
Good Faith and Fair Dealing
UCC - every contract under the UCC imposes an obligation of good faith. (Honesty in fact and the observance of reasonable commercial standards)
Common law - Every common law contract imposes an obligation of good faith and fair dealing.
